Feds Probe Loss Of Millions In Jobless Claims To Fraudsters

A Nigerian fraud ring is suspected by the U.S. Secret Service of siphoning hundreds of millions of dollars in unemployment payments from numerous state programs processing record numbers of jobless claims amid the global coronavirus pandemic.

“We are actively running down every lead we are getting,” Roy Dotson, a Secret Service agent specializing in financial fraud, said in a memo obtained by the New York Times (NYT).  

A Nigerian fraud network, assisted by couriers in the U.S., is suspected of targeting the unemployment departments in Washington, Florida, Massachusetts, North Carolina, Oklahoma, Rhode Island and Wyoming. 

The couriers — also known as mules — were likely tapped to launder money, the NYT report indicated. The Secret Service memo said every state could be targeted.

“It is assumed the fraud ring behind this possesses a substantial P.I.I. [personally identifiable information] database to submit the volume of applications observed thus far,” the memo said, as per the report.

The fraudsters filed fake unemployment claims using social security numbers that were possibly swiped in other hacks, officials said. 

Washington State was hit the hardest, and officials there realized that something was likely amiss when working residents questioned unemployment paperwork they had received in the mail.

“There’s a dire need to get money out quickly,” Suzi LeVine, the commissioner of Washington’s Employment Security Department, told the NYT. “This makes us an attractive target for fraudsters.”

She said the department was now looking at patterns in an attempt to weed out questionable unemployment cases before payments were issued. The department also instituted a two-day waiting period before money is distributed so staff has more time to confirm that the claim is legitimate.

Over 36 million people have filed for unemployment across the U.S. since stay-home mandates were instituted in March. The unprecedented surge in jobless claims overwhelmed unemployment systems in many states. 

Fraud is prevalent amid the COVID-19 pandemic as criminals find new ways to take advantage of market volatility and other aspects of the unique circumstances. A recent regulatory notice issued by the Financial Industry Regulatory Authority (FINRA) warned that “events with such profound impact” like the coronavirus “routinely create opportunities for financial fraud,” with the Business Email Compromise (BEC) a major opportunity for many criminals.